China and Iraq: The Return

6/22/12: By Richard Weitz

For the past two decades, China has neither followed nor strongly opposed U.S. policy regarding Iraq.

In the lead-up to the 1990-91 Gulf War, the PRC adhered to a carefully crafted neutral stance, abstaining from the U.N. vote authorizing the use of force while both condemning Iraq for invading Kuwait and repeatedly calling for a peaceful solution.

Later in the 1990s, China joined France and Russia in the calling for early lifting of sanctions against Iraq. In 2002, as the United States pushed for an ultimatum on Saddam Hussein to comply with disarmament resolutions, the PRC voted in favor of UN Resolution 1441 to give Iraq one last chance to comply.

China benefited in many ways from the 2003 war in Iraq. While U.S. military strategists have been preoccupied with winning counterinsurgencies rather than conventional wars with China, PRC analysts have been able to learn much about the capabilities and vulnerabilities of the U.S. military from its long wars in Iraq and neighboring states. Americans’ subsequent preoccupation with the Iraq war enhanced the PRC’s freedom of action both regionally and globally. Credit Image: Bigstock

More recently, in developing relations with Iraq through securing construction contracts and access to Iraq’s oil, China pursues an approach that will not directly conflict with U.S. objectives regarding Iraq. Although China is eager to acquire Iraqi oil, Chinese national oil companies have become significant players in Iraq’s oil sector only in the last few years.

China benefited in many ways from the 2003 war in Iraq.

The war diverted U.S. attention and resources from possible use in Asia. It also drove the U.S. government into deeper debt, and the conflict alienated many nations from the United States.

While U.S. military strategists have been preoccupied with winning counterinsurgencies rather than conventional wars with China, PRC analysts have been able to learn much about the capabilities and vulnerabilities of the U.S. military from its long wars in Iraq and neighboring states.

While collecting gains, Chinese policy makers skillfully managed to avoid antagonizing the United States over the Iraq war.

In the months leading up to the March 2003 Anglo-American invasion of Iraq, Chinese officials declared their opposition to military action not led by the United Nations. Yet, Chinese opposition was less muted than that of many other countries, including close U.S. allies such as France and Germany.

More recently, in developing relations with Iraq through securing construction contracts and access to Iraq’s oil, China pursues an approach that does not directly conflict with U.S. objectives regarding Iraq.

Globally but especially in East Asia, the PRC soft power increased when Beijing opposed the invasion, joining the position of most of the world’s nations. After seeing the United States suffer the consequences of its unilateral militaristic policy in Iraq, the PRC seems emphasized multilateralism and the use of soft power as the predominant paradigm for foreign policy.

Americans’ subsequent preoccupation with the Iraq war enhanced the PRC’s freedom of action both regionally and globally.

The U.S. neglect of East Asia led regional leaders to complain that they needed to invent terrorist threats to get Washington’s attention. Meanwhile, Chinese diplomats sought to fill the vacuum in countries felt alienated or ignored by Washington. Another effect of the Iraq war is the simultaneous decrease in U.S. popularity and the rise of China’s soft power on the international stage.

The PRC’s marketing of its noninterventionist foreign policy along with its example of an economically successful authoritarian regime has been well received by leaders looking for an alternative to the American liberal democratic free-market model.

It is true that the projection of U.S. military power into the Middle East and Central Asia fed longstanding PRC concerns about a U.S. containment strategy designed to constrain China’s rise. But this effect was balanced by Chinese policymakers’ increasingly seeing the world as multi-polar, with China, the European Union, Russia, India, Japan, and to an extent the Middle East able to counterbalance U.S. power more effectively than in the past.

As then Secretary of State Colin Powell and other U.S. diplomats made their case for war at the United Nations, PRC officials concluded that the United Nations provides a major international obstacle to the use of U.S. military power for regime change. PRC policymakers came to value the role of the UN and other multilateral institutions in counterbalancing the projection of U.S. power.

The PRC, as one of the five veto-members of the Security Council, finds this body especially useful in hobbling U.S. foreign policies. It has only been in recent years that the United States has begun to recover its regional influence, due to a new White House team that has made the region its highest priority and to the still inexplicably brash Chinese actions of 2009, which undid a decade of good will and alarmed Asian elites previously optimistic that China’s rise to regional superpower status need not come at their expense.

PRC analysts worried that the United States was focusing its attention and resources on East Asia well before the announcement of the Asian Pivot. The Pentagon is removing forces from the Europe and the Middle East with the possibility of increasing deployments in East Asia.

China has been attempting to reestablish influence in post-Saddam Iraq by actively participating in Iraq’s reconstruction. The pre-war commercial agreements between China and Iraq were temporarily frozen during the war, but China was not excluded from participating in rebuilding Iraq despite its opposition to the use of force in 2003. When the president of the Iraqi interim Governing Council, Bhr Ul-Uloum, visited China in March 2004, PRC President Hu Jintao stressed Chinese willingness to consolidate and develop bilateral cooperation with Iraq. The Chinese embassy then reopened less than two weeks after the transfer of authority to the Iraqi interim government in June 2004. China has then been providing fellowships for Iraqi students to study in China and has also been training a number of Iraqi technicians, management personnel, as well as diplomats. War-torn Iraq provided a ready market for cheap Chinese goods.

In the reconstruction period, a transformation from the close market to an open market in Iraq did not seem to dilute China’s share in Iraq’s development plans.

The PRC’s success in expanding its economic interests can be observed in its monopoly of the telecom industry in Iraq. In 2004, China won the bidding of Iraq’s telecom infrastructure reconstruction contract: Zhongxing Telecom Co. (ZTE) became the first Chinese company to reenter the Iraq market after the U.S. invasion.

China’s state-owned oil companies have certain competitive advantages over Western companies: they prioritize acquisition rather than profits. Moreover, Chinese seem to be less concerned about safety issues in Iraq, compared to their Western counterparts. The ability to take lower profits and higher risk thus gave Chinese oil companies better chances of winning bidding contracts in post-war Iraq.

These advantages facilitated China’s economic interests and influence in Iraq; and they also contributed toward strengthening of China’s energy security. In 2009, China became the largest foreign oil investor in Iraq when China National Petroleum Corporation (CNPC) successfully began its oil production in Ahdeb Oil Field. The CNPC was the first oil company that produces oil to produce oil in two decades.

By 2008, China had become Iraq’s fifth largest foreign supplier. PRC representatives made clear that these goodwill gestures were intended to be followed by reciprocal action in the forms of construction contracts and oil contracts.

Mindful of the importance of its relationship with the United States, PRC representatives did not challenge U.S. policies that vigorously. The PRC did not join the French-Russian-German February 2003 joint statement against the invasion, voted for UNSC Resolution 1546 in June 2004 legitimizing the presence of the U.S.-led multinational forces in Iraq, and did not attack the occupation’s efforts to eliminate the prewar Baathist authoritarian regime and transform Iraq into a liberal democracy.

Even so, PRC policymakers strove to dilute the postwar influence of the occupying powers.

China has generally tried to elevate the UN role in Iraq to dilute U.S. influence in Iraq and enhance that of its own. A more prominent UN role in Iraq would have not only limited U.S. power in the region, but would also have boosted Beijing’s leverage in dealing with the new Iraqi authority. China has also sought to generate goodwill in the Arab world by distinguishing its policy from that of the United States.

On May 26, 2004, the PRC delegation to the UN Security Council offered an “unofficial document,” with China’s suggestion for revising a draft resolution on occupation policy proposed by the United States and United Kingdom. This memorandum called for a greater role for the United Nations in Iraqi reconstruction and a proposal that the multinational coalition’s mandate in Iraq should expire by January 2005.

PRC diplomats lobbied for the importance of respecting Iraqi sovereignty and granting Arab countries a more significant role in Iraqi affairs. At the Fourth Session of the Tenth Chinese National People’s Congress, which was held in Beijing in March 2006, Minister of Foreign Affairs Li Zhaoxing stressed the PRC wanted to see three principles in the reconstruction of Iraq: the preservation of Iraq’s independence, sovereignty, and territorial integrity. Li further called for a greater role UN and international community in Iraq’s reconstruction.

In addition, China has sought to develop ties with the new Iraqi government.

PRC Foreign Ministry spokesman Liu Jianchao asserted in 2006 that “China is ready to work together with the new Iraqi government to advance bilateral ties of friendship and cooperation.”

In June 2007, Jalal Talabani made the first official state visit to China by an Iraqi president since the two countries established diplomatic relations in 1958. During a bilateral meeting, President Hu stated that the Chinese government would continue to encourage its enterprises to invest in Iraq and help train its personnel, therefore reiterating Beijing’s commitment to support and participate in the country’s reconstruction process. The two governments reasserted their willingness in furthering cooperation in energy, education, technology, health and reconstructions. More importantly, this agreement touched upon the core national interests of China.

For example, Talabani expressed Iraq’s support in one China policy and asserted that the overall development of China-Iraq relations is the consensus of Iraqi people, and it would contribute to the stability in the region. Hu emphasized the necessity of China-Iraq cooperation, coordination, and reach consensus in the region, as well as China’s support in the independence and sovereign territorial unity of Iraq.

The PRC government also pledged to forgive a substantial amount of the $8 billion Iraqi debt to China, a promised made good three years later with an 80% waiver. Deputy Foreign Minister Shen Guofang acknowledged the Chinese hope that the debt waiver would increase the PRC’s opportunities to bid on Iraqi oil and infrastructure projects. China also granted Iraq $6.5 million for public health and development programs. CCTV broadcasted the visit, reporting, “[Talabani’s] visit this time has proven a landmark in Sino-Iraqi relations. More importantly, the bilateral agreements will help restore Iraq’s social order, and it is hoped, plant new seeds of friendship between Chinese and Iraqi people.”

For its part, Talabani, who was accompanied by a 36-strong delegation, said that the presence of its key ministers (oil, finance, interior) showed its desire to boost relations between the two countries. Talabani welcomed PRC firms to join the bidding for Iraqi oil contracts. “In Iraq,” he said, “we look on the achievements of China as an achievement for people seeking freedom and independence throughout the world.” The two governments signed four agreements in the realms of foreign affairs, the economy, technology and education.

In January 2008, Iraqi and Chinese officials met in Beijing to begin the first session for activating the Memorandum of Understanding (MOU) signed by their respective ministries. The MOU established a mechanism for developing bilateral relations and political consultation, activated conventions in the fields of energy and human resources, and furthered cultural and economical relations. Specifically, the two sides agreed to develop their trading relationship and encourage Chinese investments in reconstruction, communications, and transportation.

In 2011, China helped lift the UN sanctions placed on Iraq in earlier Security Council resolutions. In July, 2011 Iraqi Prime Minister Nouri al-Maliki paid an official visit to China, the first made by an Iraqi Prime Minister in fifty years. He wanted to mend diplomatic ties and discuss ways to enhance long-standing relations between Iraq and China. Al-Maliki sought China’s aid in Iraq’s economic reconstruction, especially in Iraq’s energy sector.

China has also been encouraging bilateral talks between Iraq and Kuwait under UN Security Council auspices, with a view to resolve pending issues between them. China is still emphasizing the need to maintain Kuwait’s sovereignty and territorial unity.

Moreover, the Chinese Ambassador to Kuwait qualified as legitimate Kuwait’s demands for compensation with regards to the invasion of 1990. China’s support to Kuwait is reciprocated by the latter’s support to China in various issues such as Taiwan and human rights. The two countries enjoy a strong relationship and cooperate in various fields. Furthermore, in October 2009, during a visit by the Kuwaiti leaders, six agreements and memorandums of understanding were signed in the fields of energy, education, communication, sports and finance. The relation is gradually expanding as bilateral trade keeps increasing and new oil deals are being negotiated.

In 2011, al-Maliki visited China and met Chinese Premier Weng Jia-bao. Each party reasserted its keenness to pursue further cooperation in economic issues including the supply of energy. In addition, al-Maliki called China a strategic partner of Iraq and expressed his desire for the establishment of Chinese reconstruction funds in Iraq. Weng repeated President Hu’s remark in 2007, once again asserting China’s aspiration to cooperate with Iraq in regional and international affairs. These events and the developments have indicated the transformations in strategic calculation by both China and Iraq toward bilateral relations. In balancing its economic and military goals in Iraq, China uses economic cooperation in pursuit of its political goals, while Iraq is preoccupied with receiving economic benefits from China.

China does face one new complexity: Beijing must manage relations with an Iraq whose domestic politics is more complex than under Saddam.

On some issues, such as exploiting northern Iraq’s oil wealth, many veto players can block an agreement. In other words, China must put much more efforts toward reaching those who have a say in Iraq’s foreign policy making. A federal, consociational, power-sharing system was adopted in Iraq to accommodate the interests of different groups.

However, one of the biggest challenges of a consociational system is “inefficiency” in policy making. This problem has already been shown in the power struggle between the central and Kurdish government in regarding foreign investment in Kurdistan’s oil fields.

Nevertheless, while a highly divided Iraqi society increases the costs for China and any other countries seeking to maintain good relations with all stakeholders in Iraq, it does provide them with more opportunities to access the policy making process and play off each veto player against others.